Councils soon won’t be able to replace homes sold under Right to Buy, research claims

The Local Government Association (LGA) has warned that the ability of English councils to replace homes sold under Right to Buy ‘will all but be eliminated within five years’, unless the scheme undergoes major reform.

Research commissioned by the LGA and undertaken by Savills considers the impact of restrictions on councils’ ability to borrow to build new homes.

It suggests that two-thirds of councils will not be able to replace homes sold off under Right to Buy on a one-for-one basis in five years unless a “significant” restructuring of the scheme happens. Less than a third of councils will be able to sustain one-for-one replacement of homes in five years, according to the report.

In 2017, 12,224 homes were sold under the scheme. Should these levels of sales remain consistent, with continuing borrowing restrictions, the research calculates that in 2023 councils will only be able to replace 2,000 of these homes.

The LGA said councils are being hampered in replacing homes because a portion of all receipts are given to the Treasury, rather than reinvested in housing.

The representative for councils in England and Wales continued by noting that in the past six years more than 60,000 homes have been sold off at an average price of half the market rate. This means that councils can fund to build or buy just 14,000 replacement homes.

Without a “fundamental re-examination” of how the Right to Buy scheme is funded, “it faces becoming a thing of the past,” said the LGA.

Councils have called to be allowed to borrow to build new homes, and to be able to keep 100 per cent of all sales receipts. They also want the ability to set Right to Buy discounts locally to reflect community needs.

Martin Tett, housing spokesman for the LGA, said that without reform, “this vital stepping stone into home ownership is under threat”.

“Councils urgently need funding to support the replacement of homes sold off under the scheme, or there’s a real chance they could be all but eliminated. Without a pipeline of new homes, future generations cannot benefit from the scheme.

“Enabling all councils to borrow to build and to keep 100 per cent of their Right to Buy receipts will be critical to delivering a renaissance in housebuilding by councils. However, if we’re to truly make Right to Buy sustainable, we must also move towards greater flexibility on discounts locally so we can reflect local community need.

“Councils are closest to their communities and it’s essential this money is reinvested in homes in those areas so our residents can access secure, affordable housing. This money is badly needed to deliver homes for our residents – instead of resting in an account in Whitehall, it should be sent back to where it belongs.”